USD/JPY Breaks Down Below 110.80 Ahead of US NFP

Key Highlights

  • The US Dollar struggled on two occasions to break the 111.80 resistance against the Japanese Yen.
  • There was a double top pattern formed with resistance at 111.80-82 on the 4-hour chart of USD/JPY.
  • The US ADP Employment Change in August 2018 was 163K, less than the 190K forecast.
  • Today, the US NFP figure for August 2018 will be released, which is forecasted to post an increase of 191K.

USDJPY Technical Analysis

The US Dollar remained supported this week above the 110.50 pivot level against the Japanese Yen. However, the USD/JPY pair also struggled to break the 111.80 resistance zone and declined recently.

USDJPY Technical Analysis US Dollar Japanese Yen

Looking at the 4-hours chart, the pair failed for the first time at 111.82 and declined sharply. It broke the 111.00 support and traded below the 38.2% Fib retracement level of the last wave from the 109.77 low to 111.82 high.

However, losses were protected by the 110.80 support, the 100 simple moving average (red, 4-hours), and the 50% Fib retracement level of the last wave from the 109.77 low to 111.82 high.

The pair bounced back above the 111.00 and 111.50 levels, but sellers once again protected the 111.80 resistance. USD/JPY was rejected, which means there was a double top pattern formed with resistance at 111.80-82.

The pair traded lower and broke a bullish trend line with support at 111.00, the 200 simple moving average (green, 4-hours), and the 100 SMA (red). It opened the doors for more losses towards the 110.50 and 110.20 levels.

In the short term, if the pair corrects higher, it could find resistance near the 110.80 level and the 100 SMA. On the downside, the next major support is at 110.20 followed by the 110.00 level.

Recently, the US ADP Employment Change for August 2018 was released by the Automatic Data Processing, Inc. The market was looking for a change of 190K compared with the last 219K.

US ADP Employment Change August 2018

The actual result was on the lower side as there was an increase of 163K in the Private Sector Employment. Moreover, the last reading was revised down from 219K to 217K.

The US Dollar traded lower slightly and pairs like EUR/USD and GBP/USD recovered. Today’s NFP release in the US for August 2018 could play a key role for the next move in USD/JPY and other major pairs.

Economic Releases to Watch Today

  • Euro Zone Gross Domestic Product Q2 2018 (QoQ) – Forecast 0.4%, versus 0.4% previous.
  • Euro Zone Gross Domestic Product Q2 2018 (YoY) – Forecast 2.2%, versus 2.2% previous.
  • US nonfarm payrolls August 2018 – Forecast 191K, versus 157K previous.
  • US Unemployment Rate August 2018 – Forecast 3.8%, versus 3.9% previous.
  • Canada’s employment Change payrolls August 2018 – Forecast 5.0K, versus 54.1K previous.
  • Canada’s Unemployment Rate April August – Forecast 5.9%, versus 5.8% previous.

Aayush Jindal

Aayush is a Senior Forex, Cryptocurrencies and Financial Market Strategist with a background in IT and financial markets. He specialises in market strategies and technical analysis, and has spent over a decade as a financial markets contributor and observer. He possesses strong technical analytical skills and is well known for his entertaining and informative analysis of the currency, commodities, Bitcoin and Ethereum markets.

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